(Adds details on charges, background on Europe operations)
MUMBAI, May 14 (Reuters) - India’s Tata Steel Ltd said on Thursday it expected to take a non-cash writedown of about 50 billion rupees ($785.3 million) in the quarter ended March 31, chiefly relating to its loss-making long products business in the United Kingdom.
Tata Steel, Europe’s second-largest steelmaker, has been forced to slash costs and jobs following its 2007 entry into the continent, where steel demand has languished since the financial crisis and clients have turned to cheaper Chinese imports.
The company said last year it was in talks to sell its long products division, including mills in northern England and Scotland to Geneva-based Klesch Group.
Tata Steel entered Europe through its $13 billion acquisition of Corus, formerly British Steel, just before the financial crisis.
The impairment also includes a writedown of investments in overseas raw materials projects in Mozambique, Ivory Coast and a taconite project in Canada because of low commodity prices, Tata Steel said.
The company’s profitability has been hit in recent quarters after a slowdown in China and a devaluation of the Russian rouble led to a surge of cheaper steel products entering international markets, pressuring steel prices and squeezing margins.
The Mumbai-based company’s domestic production has also been hit by a raw material shortage following a string of mining stoppages, causing its plants to operate below capacity.
Tata Steel’s liquidity position or financial covenants will not be affected and the total impairment charge for the year ended March 31 would be around 65 billion rupees ($1.02 billion), the company said.
Tata Steel reports fourth quarter and full year results on May 20. ($1 = 63.6700 Indian rupees) (Reporting by Aman Shah; Editing by Biju Dwarakanath and Vincent Baby)